When you sell a product that the customer perceives
as a commodity, you can only compete on price.
A small business owner always loses a price war to the “big boys” who
have the ability to buy products in bulk and have cost savings as a result of
economies of scale.
So if you can’t beat them on their field, don’t play
there! Change the rules and the game and
play on a field where they can’t compete.
You accomplish this by adding value to your commodity product in a way
that the “big boys” can’t or won’t match.
When I started my CPA firm, I faced this same
problem. The tax factories like H &
R Block had a marketing budget I couldn’t compete with. The larger CPA firms could offer more
services. The smaller bookkeepers could
undercut us. Trying to compete on those
playing fields was a quick road to mediocre sales and profits.
So I changed the game!
In the tax areas, we concentrated on mid-year and
year-end tax planning. The tax return
was still a commodity, and we really couldn’t charge more than the normal
market price. But our clients were very
willing to pay premium prices to save on their tax bill.
We competed with the larger CPA firms by
concentrating on profit and sales consulting to small businesses. The bigger firms concentrate on the mid-size
to larger firms, and really don’t want to mess with the smaller companies. But these smaller companies need that help,
and are very willing to pay whoever can provide it.
We attacked the bookkeeping market in two ways. First, we sold QuickBooks training to the
smaller companies. This immediately
saved them money by eliminating the bookkeeper.
Since we helped them, they naturally brought their tax and business consulting
work to us. Second, we sold automated
outsourced accounting to those companies that had the need for an internal
bookkeeper at prices that were below what that would cost them, but much higher
than what bookkeepers would charge.
Notice that in all three situations above, we made
it impossible for our customers to compare us to anyone else because we were
providing solutions that no one else was offering. They no longer could compare apples to apples because
we were selling oranges! This led to more
repeat customers, more sales, and higher profits.
So, how can you start selling oranges instead of
apples?